Category Archives: Chapter 11

Subscribe to Chapter 11 RSS Feed

Fees for Defending Fees – Recent Rulings Permit Contractual Circumvention of Supreme Court’s Baker Botts v. Asarco Decision

The Supreme Court two years ago ruled in Baker Botts v. Asarco that bankruptcy professionals entitled to compensation from a debtor’s bankruptcy estate had no statutory right to be compensated for time spent defending against objections to their fee applications.  Since then, “estate professionals,” i.e., those retained in a bankruptcy case by a trustee, debtor … Continue Reading

Jevic Could Be the Most Consequential Chapter 11 Decision in Many Years

The U.S. Supreme Court will hear the case of Czyzewski v. Jevic Holding Corp. during the new term that began last week.  The questions it presents are relatively simple.  First, can a bankruptcy court, in dismissing a case under the U.S. Bankruptcy Code, permit parties to “structure” the dismissal to include substantive provisions regarding the … Continue Reading

Ruling on Pipeline Agreements in Sabine Chapter 11 Case Indicates Battles That Lie Ahead in Energy Company Bankruptcy Cases

U.S. Bankruptcy Judge Shelley Chapman ruled last week in the chapter 11 case of Sabine Oil & Gas that Sabine could utilize the U.S. Bankruptcy Code to “reject” certain agreements with pipeline operators.  This decision will permit Sabine to walk away from its obligations under the agreements and leave the pipeline operators with nothing but … Continue Reading

Delaware Bankruptcy Judge Rejects Effort to Circumvent Supreme Court’s Asarco Decision

The Supreme Court’s decision last term in Baker Botts v. Asarco, in which the Court ruled that professionals that are paid from a debtor’s bankruptcy estate cannot be compensated for time spent defending their fee applications, continues to rankle bankruptcy practitioners.  Moreover, a recent decision in a Delaware bankruptcy case shows that the impact of … Continue Reading

Were the Energy Future Holdings and Caesars Chapter 11 Cases Just Saved by K Street Lobbyists?

Bankruptcy and restructuring professionals usually do not need to be political junkies. Amendments to the Bankruptcy Code, and the accompanying machinations of the Congressional legislative process, typically occur at a glacial pace, and such changes nearly always affect future rather than current chapter 11 cases.  However, the federal tax and spending bill approved by Congress … Continue Reading

Energy Future Holdings – Kicking a Very Large Can Down the Road

Energy Future Holdings (“EFH” or “Debtors”) has cleared all of the preliminary hurdles in its path as it moves towards the confirmation of its plan of reorganization (the “Plan”). Last week Judge Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware approved the Debtors’ disclosure statement in support of the Plan, … Continue Reading

Baker Botts v. Asarco: The Supreme Court Shows Again That It Really Doesn’t Understand Corporate Bankruptcy Cases

The Supreme Court has not handled its recent major bankruptcy decisions well. The jurisdictional confusion engendered by its 2011 decision in Stern v. Marshall was only partially clarified by this term’s opinion in Wellness International Network v. Sharif. The Court’s ruling this week in Baker Botts v. Asarco, while narrower, stands as another example of … Continue Reading

Energy Future Holdings – Bidding Procedures Fight Highlights Conflicts Among Affiliated Debtors

Energy Future Holdings (EFH), f/k/a TXU Corp., an energy company centered in Texas, was taken private in 2007 in the largest leveraged buyout transaction that has ever taken place.  The deal was largely predicated on an anticipated rise in natural gas prices; when prices instead plummeted the company, which had borrowed nearly $40 billion, was … Continue Reading

Interesting ResCap FactOID – Court Rejects Effort to Disallow Portion of Bond Claims Based on “Original Issue Discount”

In an opinion that will have a significant impact on the viability of debt for debt exchanges and out of court restructurings, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has refused in the Chapter 11 case of Residential Capital LLC (“ResCap”) to disallow a portion of the … Continue Reading

Auto-Hauler Allied Systems Holdings’ Car Wreck of a Chapter 11 Case May Finally Be at an End

Many commentators have remarked that a “new normal” has evolved for Chapter 11 proceedings, wherein the major constituents negotiate the salient terms and exit strategy of the debtor’s restructuring prior to the filing of the bankruptcy petition, generally leading to shorter, less litigious cases. This dynamic, often evidenced by a plan support agreement, a proposed sale … Continue Reading

“Girls Gone Wild” Chapter 11 Case – [Insert Joke Here]

GGW LLC and its affiliates (“GGW”), which produce and distribute the soft core pornography videos known as “Girls Gone Wild”, recently filed for relief under chapter 11 of the Bankruptcy Code. The filing follows years of legal troubles for the company’s founder, Joe Francis, including criminal charges of racketeering and tax evasion, and civil litigation against … Continue Reading

Absolute Priority Rule Absolutism? Strict Interpretation of Bankruptcy Code Cramdown Provisions Nearly Causes Hawker Beechcraft Plan Confirmation to Skid Along the Runway

By nearly any measure, the Chapter 11 cases of Hawker Beechcraft and its affiliates (the “Debtors”) stand as a significant success. The cases began as a standalone reorganization predicated upon a restructuring support agreement (the “RSA”) among the Debtors’ senior lenders and noteholders, which soon thereafter gained the support of the creditors’ committee. The cases then switched … Continue Reading

A Messy Break-Up But a Clean Divorce: Dewey LeBoeuf Avoids Litigation Morass of Most Law Firm Bankruptcy Cases

Large law firm failures typically produce lengthy and litigious bankruptcy cases. A frustrated lawyer in one such case succinctly described the essential problem: “the assets walk, talk and, worst of all, have their own counsel.” To the inherent tensions and creditor demands of any large chapter 11 case are added  the raw pain, similar to divorce, that … Continue Reading

Not Required, But Still Appropriate – Judge Glenn Appoints Examiner in ResCap

The chapter 11 case of mortgage lender and servicer Residential Capital, LLC (“ResCap”) is fascinating on a number of levels. Its parent company, Ally Financial, Inc. (“AFI”), hopes to use ResCap’s bankruptcy to extricate itself from potential liabilities arising from the collapse of the residential housing market at the end of the last decade. To that end, … Continue Reading

NewPage – A Good Old Fashioned Free-Fall Chapter 11 Case

Last week’s Chapter 11 filing by NewPage Corporation, a company with assets and liabilities in the billions of dollars, stands as a relative rarity in the current restructuring environment. Running contrary to the “new normal” in larger restructurings, NewPage filed for bankruptcy protection without a pre-arranged or pre-negotiated exit solution, such as a back-stopped rights offering … Continue Reading

Keeping Pace With Chapter 11’s “New Normal”

I am serving this year on the Editorial Advisory Board for the Journal of Corporate Renewal, published by the Turnaround Management Association and available to all TMA members.   My guest editor’s column for the June issue, "Keeping Pace With Chapter 11’s ‘New Normal’", is available here. … Continue Reading

The Dog That Didn’t Bark – Second Circuit’s Opinion in DBSD North America Disallows Gifting, But Is Silent on Cramdown of Secured Creditor

As discussed in previous posts on this site, back in December the Second Circuit Court of Appeals issued a summary order that reversed the bankruptcy court’s confirmation of the reorganization plan (the “Plan”) of DBSD North America, f/k/a ICO North America (“DBSD”). The Court sustained a challenge to the Plan brought by Sprint-Nextel, an unsecured creditor, … Continue Reading

Second Circuit Affirms Unfavorable Plan Treatment of Senior Secured Creditor in DBSD North America

The Second Circuit Court of Appeals issued a summary order this week upholding the aggressively unfavorable treatment of a senior secured creditor under the reorganization plan (the “Plan”) of DBSD North America, f/k/a ICO North America (“DBSD”). (The Second Circuit upheld a separate challenge to the plan brought by an unsecured creditor). The summary order states that … Continue Reading
LexBlog